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Contents:

Prepared Remarks:

Ladies and gentlemen, thank you for standing by and welcome to the AMC Networks First Quarter 2020 Earnings Call.

I would now like to hand the conference over to your speaker, Mr. Seth Zaslow, Senior Vice President of Investor Relations. And your lines are now live.

Seth Zaslow -- Senior Vice President of Investor Relations

Thank you. Good morning and welcome to the AMC Networks first quarter 2020 earnings conference call. Joining us this morning are members of our executive team: Josh Sapan, President and Chief Executive Officer; Ed Carroll, Chief Operating Officer; and Sean Sullivan, Chief Financial Officer. Following a discussion of the company's first quarter 2020 results, we will open the call for questions. If you don't have a copy of today's earnings release it is available on our website at amcnetworks.com. Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of the future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to the company's filings with the Securities and Exchange Commission for a discussion of risks and uncertainties. The company disclaims any obligation to update the forward-looking statements that may be discussed during this call. Further, we will discuss non-GAAP financial information. We believe the presentation of non-GAAP results provides you with useful supplemental information concerning the company's ongoing operations and is appropriate in your evaluation of the company's performance. For further details, please refer to the press release and related footnotes for GAAP information and a reconciliation of GAAP to non-GAAP information, which we'll refer to on this call.

With that, I would now like to turn the call over to Josh.

Josh Sapan -- President and Chief Executive Officer

Good morning, everyone, and thank you for joining us. We hope that you, your families and your colleagues are safe and healthy. I'll take a few minutes to give a brief overview of how we are managing our business operations during this challenging period and touch on key operational metrics before turning the call over to Sean Sullivan for more detail on our financial results. Certainly, the end of the first quarter brought unprecedented challenges to our business. In what has been a tough and unique operating environment, we have generated significant levels of free cash flow and we remain well capitalized with a strong balance sheet and strong liquidity. Our company's key areas of focus, which we've detailed on previous calls, remain: creating strong content and valuable IP; diversifying revenue, particularly by growing our targeted subscription video-on-demand services; and maximizing the value of our linear channels. Our investments in these areas over the last several years, along with our very strong balance sheet and our ability to manage expenses with discipline, are enabling us to navigate this challenging time from a position of strength and will continue to serve us well when this environment stabilizes and as we look beyond this period for the remainder of 2020 and ahead to 2021 and beyond.

The most immediate significant factor for our business in this period has been on our ad casts, particularly in the categories that have been most affected by sheltering at home mandates. These include travel, auto, restaurants and theatrical exhibition. In addition, we've had to postpone production and post-production work on a number of shows resulting in some scheduling shifts between now and the end of the year, which we're also managing through. The current environment has also produced several opportunities for new or reimagined content showcasing our talent, that has proven appealing to consumers in this environment. There are several examples, including a home edition of our Talking Dead after-show, a new series called Friday Night In With the Morgans, featuring the Walking Dead's Jeffrey Dean Morgan; and talent from WEtv's Love After Lockup series self-shooting videos of about what it's like to be isolated and what steps to take. Our current writer's rooms are now operating as virtual writer's rooms including the rooms that will produce season 11 of the Walking Dead and the final season of Better Call Saul. So that work continues. During this time, companies in our industry have been affected by varying degrees, depending on their exposure to different categories of business.

We have relatively less direct exposure to certain categories that have been particularly severely impacted by social distancing protocols and that depend on large gatherings such as distribution of large theatrical film, sports and live events with the exception of a majority interest in Levity Entertainment Group, which operates comedy clubs in the U.S. As we look ahead to the second half of 2020 and into 2021, we are actively planning for how and when we will begin to normalize our operations depending on the economy reopening and improving at different points in time. As many of you are aware, sometimes we've been operating very targeted subscription video-on-demand services that appeal to discrete and distinct audiences. These targeted SVOD services have a radically different economic profile than those of the general entertainment SVOD services with ours having relatively modest content and marketing investment. Since mid-March when many Americans began sheltering at home, we have seen strong growth across those services; Acorn TV, Shudder, Sundance Now and UMC Urban Movie Channel. We now anticipate ending 2020 in the range of 3.5 million to 4 million paid subscribers in aggregate across those services. That is two years ahead of our previously stated target of reaching this milestone by 2022.

While these numbers are smaller relative to the services engaged in the so-called streaming wars that are looking for massive share opportunities and that dominate industry conversations they are nonetheless quite meaningful for AMC Networks against the backdrop of our radically different economics and our overall business. As we've stated on prior calls, we believe the overseas market opportunity of these targeted SVOD services is significant particularly over time. Acorn TV, the largest of our services focuses on international mysteries and dramas and we're seeing increasing momentum for it globally. We recently launched the service in the U.K., an important market for Acorn as well as on Apple TV channels in Australia and in Latin America two markets that also represent good opportunity. If I may, I'll move on to advertising for a moment. As I mentioned earlier, while we are seeing short-term impact from marketers reducing, pausing or shifting ad investments, we are having active conversations with our ad partners to help expand their media marketing mix and buys to reflect viewership trends and consumer behaviors and to map our audience across our linear networks as well as non-linear platforms now including Pluto, Sling and many others. For clients that are ready to have them we are moving ahead with upfront conversations.

We've created an online sales portal called Upfront Connect that brings together all of our original content and access a single resource for oral upfront communications around our marketing partnerships advanced advertising and digital distribution to make it easier or faster and more convenient for our clients to engage with us during this quite unusual upfront season and then beyond. Turning for a moment to content. As I mentioned earlier, we've been doing a number of things from a programming standpoint in response to this moment with many of our viewers staying at home. This includes debuting the much anticipated third season of the Emmy and Golden Globe award-winning series Killing Eve two weeks early much to the delight of fans and critics. The premier which was simulcast on AMC and BBC America, bucked industry trends and showed growth from Season two averages across the board in total viewers and in all key demographics. And in response to high demand, we're seeing for our natural history programming on BBC America, we added a second day devoted to nature content which we are airing under a banner titled Wonder Struck. At the AMC channel, the absolutely remarkable fifth season to Better Call Saul ended on a very high note with an outpour of critical acclaim and strong ratings. The Walking Dead Season 10 also finished very strong continuing to rank as the number one show on ad-supported cable in key demos.

With Better Call Saul and the Walking Dead, AMC continues to be home the two of the top five dramas on ad-supported cable. As audiences continue to consume television in new ways, we've recently greenlit two new AMC projects and showcase how we're experimenting with new genres and formats to command the attention of audiences. The first project called National Anthem is a family drama combined with a musical element that comes from our longtime creative partner Mark Johnson. He's the Oscar-winning producer who's been the top Executive Producer on many of our shows such as Breaking Bad, Better Call Saul, Rectify, and Halt and Catch Fire. We've also greenlit our first animated series for the AMC channel called Pantheon. It's a Sci-Fi drama based on short stories by author Ken Lu, one of science fiction's most celebrated writers working today. Before I turn the call over to Sean, I'll close by briefly touching on the opportunity we see in several key areas as we continue to reshape AMC Networks over the longer term into 2021, 2022, and beyond. As it relates to distributors, as quality scripted drama becomes ever more scarce on basic cable, we are increasingly one of the very few purveyors on basic cable of this type of high-quality material.

We believe our strength and relevance in this area coupled with our attractive wholesale pricing will be an increasingly key differentiator that will position us well with MVPDs over a longer term. We will continue with our targeted SVOD services, which as I mentioned earlier are growing a very nice trajectory with sensible economics and we are exceeding our growth expectations. We will be surgical about where we spend money on linear and we'll be increasingly monetizing advertising in conventional and novel ways so that our core enterprise remains profitable. With these opportunities before us and with our healthy financial conditions and stable and strong management team, we are very confident in our strategy and believe we are well-positioned to continue to support all of our stakeholders and deliver value in these uncertain times and beyond across the near, the mid, and the long-term.

With that overview, I'll turn the call over to Sean Sullivan for more detail on our financial results. Thank you.

Sean Sullivan -- Executive Vice President and Chief Financial Officer

Thanks and good morning. I want to begin with a few comments on our financial profile and the steps we've been taking to ensure that we weather the impact of COVID-19 in the near to mid-term. Then I'll review the results for the first quarter and conclude with some comments on the impact of the pandemic on our businesses on a prospective basis. Let me start with our liquidity profile. Our strong balance sheet and financial flexibility position us well to withstand the current environment. As of the end of the quarter, we had access to over $1.2 billion in cash. We had $700 million of cash in our balance sheet, and a $500 million undrawn revolving credit facility. In addition we don't have any significant debt maturities in either 2020 or 2021. We have very manageable payments on our term loan of $56 million and $75 million in 2020 and 2021 respectively. We also continue to generate very healthy and consistent levels of free cash flow. In the first quarter we delivered $182 million in free cash and while I'll discuss our prospective outlook in more detail later in my remarks, we now expect to deliver full year free cash flow that is above 2019 levels. Our balance sheet and our strong free cash flow have continued to allow us to opportunistically allocate capital. Year-to-date we've repurchased 4 million shares for $103 million.

And in early March, we completed the previously announced $200 million debt redemption of a portion of our 4.75% notes due in December 2022 further improving our maturity profile and reducing our interest expense. In terms of capital allocation, the four key tenets of our capital allocation policy remain unchanged. They are; first, invest organically in our core business and new businesses on projects that will produce attractive returns for our shareholders. We continue to believe that the highest return for our capital is to invest in content and reposition our company for a more streaming focused landscape. We are gaining increasing confidence in this strategy. As Josh discussed, our targeted SVOD services have seen a significant increase in activity over the past six to eight weeks and we're looking to lean into this area of our business to improve our long-term positioning. Our second tenant is to maintain leverage that is appropriate for the business outlook. As of March 31, AMC Networks had net debt and finance leases of $2.3 billion. Our leverage ratio based on LTM AOI of $873 million was 2.6x. While we do expect to see our leverage ratio move upward over the next few quarters, we have significant amount of headroom on our covenants and don't foresee any issues with regard to them or our ability to service our debt. Third, make disciplined and opportunistic acquisitions to advance our strategic plan. And fourth return capital to shareholders.

As I mentioned, year-to-date, the company has repurchased 4 million shares for $103 million. As of last Friday, we had $386 million available under our existing authorization program. We will continue to be opportunistic with the pacing of our repurchase activity and you should expect it to continue to vary quarter-to-quarter. Moving to our financial results for the first quarter. Our results in the quarter were generally in line with our expectation. With the exception of advertising, COVID-19 did not have a notable impact on our performance in the quarter. Total company revenue was $734 million and total company AOI was $222 million. With respect to the performance of our operating segment as expected results of the national networks were impacted by the timing of programming and marketing. Revenues decreased 8% to $567 million and AOI was $218 million, a decrease of 21%. Advertising revenue in the quarter declined 11%. Results were impacted by lower delivery as well as a two-week shift in the airing of the Walking Dead and its related programming Talking Dead. However, increased pricing across our portfolio of networks as well as the airing of Better Call Saul on AMC and Dr. Who on BBC America helped to partially offset the unfavorable items. Around mid-March, we began to experience an impact from COVID-19 and this had a modest negative impact on our year-over-year growth. With respect to distribution, as anticipated, distribution revenues decreased in the first quarter. The main driver of the decline was subscription revenue. Subscription revenues were down in the high single-digits as compared to the prior year period.

In addition to the quarterly fluctuations based on the timing of various agreements renewals and adjustments, we continue to see a moderation mainly due to macro factors. We continue to believe that our networks offer an attractive price value relationship to our distribution partners. As for the content licensing component of distribution revenues, this line item declined in the quarter due mainly to the timing of the licensing of our scripted original programs in various windows. Most notably, results in the quarter reflected the SVOD availability of Into the Badlands and Happy and Leonard in the prior year period, which was partially offset by the SVOD availability of the most recent season of the terror in the current year. Moving to expenses. In the first quarter total expenses increased 3% versus the prior year period. Technical and operating expenses decreased 1% to $238 million. The variance primarily related to the timing and mix of originals across our portfolio of networks. SG&A expenses were $124 million in the first quarter, an increase of 8% versus the prior year period. The variance primarily related to an increase in legal expenses as well as marketing costs due to the timing and mix of originals most notably Better Call Saul. Moving to the International and Other segment. In the first quarter, International and Other revenues were essentially flat at $170 million.

Results primarily reflected increased revenue from our targeted SVOD services offset by a decline in our international networks and to a lesser extent declines at IFC films and Levity. AOI was $8 million, a decrease of $2 million versus the prior year. The decrease was primarily attributable to an increase in our targeted SVOD services offset by a decrease in our international networks and Levity. Moving to EPS. For the first quarter, EPS on a GAAP basis was $1.22 compared to $2.48 in the prior year period. On an adjusted basis EPS was $1.47 compared to $2.64 in the prior year. The year-over-year variance in both GAAP and adjusted EPS, primarily reflected the decrease in AOI as well as an increase in miscellaneous expense net of $17 million, as the current period reflected an unfavorable variance in foreign currency transaction losses. In terms of free cash flow as I mentioned, the company had a strong quarter and continues to deliver healthy amounts of cash. We generated $182 million in free cash flow for the three months ended March 2020. For the quarter, cash interest was $28 million, tax payments were $4 million, capital expenditures were $13 million and distributions to non-controlling interests were $3 million. Program rights amortization for the three-month period was $224 million and program right payments were $222 million, resulting in a source of cash of $2 million.

This compares to a source of cash for programming of $15 million in the prior year period. In terms of the impact of COVID-19 on our operations as we disclosed in our 8-K that we filed in late March, COVID-19 and the measures to prevent the spread are affecting our business in a number of ways. To the best of our ability we wanted to provide all of you with an update on how the pandemic is impacting our company. However, the ultimate impact of the pandemic remains quite fluid and makes it unusually challenging for management to estimate the future performance of our businesses. As a result the focus of our comments will be on the second quarter. Beyond the second quarter we're just not in a position to predict when and where shelter-in-place restrictions begin to ease or make assumptions about the economic conditions in the U.S. and globally and the impact they'll have on key variables such as advertising activity and our ability to resume production. With respect to the second quarter, advertising revenue at the National Networks has clearly seen the most immediate and significant adverse impact. While ratings have improved across our portfolio, monetizing these ratings has proven to be a challenge. In addition our results in the second quarter will be impacted by the delay in the airing of the final Season 10 of The Walking Dead as well as the premier of World Beyond, the third series in the Walking Dead franchise until later in the year.

As a result, we anticipate second quarter advertising revenue to be down in the range of approximately 30% year-over-year. As for distribution revenue at the National Networks with respect to subscription revenue, we anticipate that our results in the second quarter will be relatively consistent with what we saw in the first quarter of the year. This is due to the timing of reporting from our MVPD partners, as well as the anecdotal information that we've been able to gather to date. With respect to content licensing revenues, the main driver of performance will be the timing availability of our content to domestic and international platforms. To the extent that we shift the programming lineup this will impact the availability and monetization of content in ancillary windows. For instance in the second quarter, we had anticipated recognizing revenue from the international distribution of World Beyond, but that has been delayed to later in the year. As for expenses, we expect total company expenses to be down in the low to mid-teens on a percentage basis year-over-year. The suspension of production activities and the subsequent delays in the creation and availability of content will have the most notable impact. We expect a reduction in programming amortization as a result of the shift and the timing of airing of our originals such as the finale of Season 10 of The Walking Dead and the new series that I just mentioned, World Beyond.

In addition, we expect reduced variable expenses associated with lower advertising sales as well as lower marketing travel and entertainment. At our International and Other segment, we expect three businesses in particular to be impacted. As Josh discussed, our targeted SVOD services are seeing a significant increase in activity both in terms of usage and subscriber acquisition. At Levity, the comedy venues are closed and the production activity is suspended, so we are not expecting any meaningful revenue contribution from this business in the second quarter. However, we expect that a reduction in expenses will substantially offset the decrease in revenue resulting in only a modest AOI impact. As for our international networks, we are seeing similar dynamic on advertising revenue to what we are experiencing in the U.S. In terms of free cash flow as I mentioned earlier, we revised our full year outlook. We now project full year 2020 free cash to be above 2019 levels as we expect a benefit from the deferral of programming spend as well as a reduction in cash taxes to more than offset the decline in AOI. So in conclusion, overall, we feel confident about our ability to weather the pandemic given our strong balance sheet and our healthy free cash flow. Our focus remains on positioning the business to get through this period of uncertainty while also taking advantage of pockets of opportunity that we see to further our long-term strategic initiatives and positioning.

Seth Zaslow -- Senior Vice President of Investor Relations

Anybody wants to join us in the Microsoft Teams meeting feel free to go ahead. So thank you, Erin.

Unidentified Speaker

You're welcome. This concludes today's practice call. You may now disconnect.

Seth Zaslow -- Senior Vice President of Investor Relations

Operator, at this point, I think we're ready to open the line for questions.

Operator

[Operator Instructions] Your first question is from the line of Ben Swinburne with Morgan Stanley.

Ben Swinburne -- Analyst

Good morning. Josh, could you talk a little bit about what you're seeing on the SVOD side in terms of engagements? Obviously, there's a lot of additional streaming happening right now. But I'm just curious if you could give us some sense of magnitude? Also, a little bit more about maybe the ARPU trends in the business. And I think you mentioned leaning to maybe it was Sean. Can you help us dimensionalize that? Are you ramping your investment in these businesses at this point? Or given the macro environment, are you being a little more careful? And then for anyone on the call, I just was curious on the subscription revenues down high-single-digits in the first quarter. Was that impacted either positively or negatively by lapping the contractual disputes you guys called out last year? Because we thought that would have created a more favorable or a favorable comparison maybe it did, but I just thought I'd ask if that impacted the year-over-year growth rate at all? Thanks.

Josh Sapan -- President and Chief Executive Officer

Hi, Ben, thanks for the question. Yeah, I'll start with the second one first if I may. The subscription revenues in the first quarter were substantially a result of macro factors. The -- as you're well aware, there have been subscriber declines, particularly in the satellite section of our business, that's not been bolstered by high-speed data where even in the first quarter the packaging of that proved to be attractive and with the pandemic impact even more impactful. So there are macro factors related to people connecting or disconnecting or in some cases taking different tiers. And then there are, of course, individual players in that arena both not only the MVPDs but virtual MVPDs. So, all that went into the impact on AMC Networks. We did -- we've had renewals that are pretty consistent across the board and we're pleased with the renewals. They've been largely as we've expected and they have maintained our distribution in good shape across the board. And we actually have expanded our relationships with our MVPDs in certain regards. I'll turn, if I may, to the first part of your question and answer it. I'll begin the answer and then turn it over to Ed, if I may, who make -- who can offer some greater detail. As we said in the prepared remarks, we met a milestone that we identified both for ourselves and I think shared with everyone on the call.

We met it a couple of years early. That's nice news. Of course, because we've been pursuing the targeted subscription approach, which is quite different than going for big share and this is not meant to be disparaging and burning lots of cash. Along the way, we've been balancing investment with performance and subscribers and mindful of what we think total market opportunity is and pace of achieving that market opportunity. It has been pleasing to see us surpass what we thought was a milestone that had some ambition. And diagnosing whether that's early take up or whether that is a greater market opportunity than we might have anticipated is something that we'll have to wait at least some amount of time to see in the rearview mirror, but the trajectory is very good. You asked about engagement. And I'll top line it and then ask Ed to comment, which is we-and it's a critical thing you ask because people aren't buying blindly or taking trials blindly. They're actually using the stuff and spending more time on it. So, if I may I'll ask Ed to comment on the engagement on our targeted SVOD services?

Ed Carroll -- Chief Operating Officer

Sure, Josh. Yes, look we're encouraged by the level of engagement that we see. As you know in the SVOD format, when people sign up, we're able to immediately discern what show or what series they go to first, what their completion rate is, how quickly they go on to the next episode, what their total minutes streamed is in an average week or month. So we're seeing all of those levels, all those engagement levels in a very high place. So that's extremely encouraging. When we pull back and look at the model, we certainly think we've pulled -- we pulled forward some subs due to the isolation. But based on the engagement levels that we're tracking we anticipate that churn rate will not increase too much as the year goes on. And we think we have significantly left the model forward for all of our SVOD services or cumulative subs and revenue.

Ben Swinburne -- Analyst

Thank you, guys. Appreciate it.

Operator

Your next question is from the line of Bryan Goldberg with Bank of America.

Bryan Goldberg -- Analyst

Thanks. I just had a couple. Maybe I could follow up on the SVOD traction you're getting. I'm curious, are there any changes in your outlook with respect to keeping streaming rights for exclusive use on your own platforms? And are there any changes in the profit profile of your SVOD services, given the pull forward or the acceleration of subs, sorry? And then on the advertising side, I was wondering if you've seen any kind of changes or stabilization on the demand side in the last week or two now that certain parts of the country are starting to reopen? And then I guess, Sean you mentioned, the outlook for advertising will be down 30% in the second quarter. I was wondering how much of this is driven by content timing versus your assumption on organic demand position? Thanks.

Ed Carroll -- Chief Operating Officer

Hey, Bryan, it's Ed. So let's see. On the SVOD, we -- as I mentioned, we've accelerated our subscriber growth. We use content for Acorn for Shudder, much of it co-produced or originally produced or licensed for those services. Then we have content such as Nosferatu, where we're able to utilize on several of our platforms AMC and Shudder for example. And so we think that approach will continue. We think it's economically responsible and we're obviously seeing results in the market as a result of it. In terms of advertising, I would say it's a little too early. We're in conversations, obviously week-to-week and day-to-day. So I wouldn't yet draw any patterns other than to say we're working very closely with our partners. I think the network has been as flexible as it can be in terms of continuing to cultivate those good relationships. The reward for that has been much of the money that has moved away from second quarter, we've been able to keep on the networks in the second half of the year. So that's a good development. And we're now beginning to have even upfront conversations with some of the marketers. We look at this upfront. We think it will happen on a more staggered basis than the upfronts perhaps that we're used to. In individual conversations, I think there is optimism that when the economy reopens, marketers will want to spend and not lose market share. But I think it's just too early for us to make any more specific characterizations.

Sean Sullivan -- Executive Vice President and Chief Financial Officer

And then Bryan to your last question, as I highlighted the shift of The Walking Dead: World Beyond., certainly had an impact as does the market factors that Ed referred to but I don't know that I'll unpack it more than that but that's the outlook for the second quarter as we sit here today.

Bryan Goldberg -- Analyst

Okay. Thank you very much.

Operator

Your next question is from the line of Michael Nathanson with MoffettNathanson.

Michael Nathanson -- Analyst

Thanks. I have one for Josh, maybe one for Ed or Sean. So Josh, question I have for you is, how do you even think about starting production? I know you have operations in Georgia, which is becoming open. So what is your best guess? And how do you even begin thinking about starting production given how disjointed the states are in allowing different types of openings? So that's one for you. And the second one would be is, do you guys have any type of content obligations when it comes to distributors the number of live originals that maybe impact your affiliate fee payments? Or anything around obligations you have to distributors for original content? Thanks.

Josh Sapan -- President and Chief Executive Officer

Thanks, Michael. We do not have any content obligations. It's different than the sports arena, particularly I think of our business where professional events are so central to value. The businesses that we're in do not have any contractual obligations of any sort actually. People have known what we've done for a long time, and they I think has found us reliable in putting forward or exceeding what their expectations have been in terms of both form format and individual quality of shows. So I think that they have found not that there aren't always testing us around negotiations, but the AMC Networks has perhaps even over-delivered against affiliate expectations in the quality of our five channels, and what they put on across AMC BBC America, Sundrance, IFC and WE tv. So that has never been an issue -- and is not in our contractual relationships. I'll turn the specific question, if you don't mind on timing, reopening, virtual writers room, safety precautions and the influence of states over to Ed if I may.

Ed Carroll -- Chief Operating Officer

Sure. Thanks, Josh. So as Josh alluded to earlier, we've made some adjustments already as a result of the impact of the virus. We moved the killing eve from your up a couple of weeks. That was perhaps opportunistic to -- and the audience seemed to welcome it. You're probably aware we moved the Walking Dead World Beyond that's the third franchise back into fourth quarter. So we're finishing post on that. That will be set to go. We have a new show, which is quite a bit anticipated called Soulmates. It's an anthology series from some of the writers of Black Mirror. That will be airing in the second half of the year. And we anticipate having Fear some episodes of Fear Season six in the second half of the year as well for the Walking Dead. As far as the Walking Dead goes, you're correct it shoots in Georgia. As Josh mentioned, writers rooms are open and we will monitor week-to-week if not day-to-day, the production schedule. We just don't have any information that we can pass along at this time other than we're monitoring it very closely.

Michael Nathanson -- Analyst

Thanks. Can I just ask one follow-up? In your answer to Bryan's question about the negative 30 you're implying that some money moved from the second quarter as originals move, right? So 30 -- down 30 may not be the organic number? It seemed like there's some shifts of money out to quality. Is that a correct interpretation of what you said to Bryan?

Ed Carroll -- Chief Operating Officer

Yeah. I mean I think we've said a few things. We had some timing shifts in our programming. That's certainly a factor. And as well, there was a demand issue with certain categories wanting to pullback or move their money to later in the year.

Michael Nathanson -- Analyst

Okay. And that's with upfront guarantees they moved it back. Okay. Thank you.

Operator

Next question is from the line of John Janedis with Wolfe Research.

John Janedis -- Analyst

Hi. Good morning, guys. Thank you. Two questions for me. One is how are you thinking about your business longer-term post-COVID? Are there longer-term structural changes that you're thinking about either on the distribution programming geographic or expense front? And maybe a follow up on advertising, you talked about the online sales portal. With some of the delays around production and the upfront how are you thinking about your fourth quarter in terms of the programming and then selling against it?

Josh Sapan -- President and Chief Executive Officer

Sure. John this is Josh. Long term the trends that we have been seeing are either remaining in place or accelerating. And we have been preparing for them for years meaning that their pressure on United States and to some -- in some places international pay-TV subscribers are not new. We -- and both pressures in terms of counts and also willingness to pay high wholesale rates. So in response to that, we have been careful about maintaining a portfolio of five channels of having them priced appropriately and of delivering high-value to a U.S. environment on a worldwide environment. That has certain pressures on the price side because that translates into retail and margin. And also the trend is -- has some pressures on growth or lack of growth. So that's number one. Number two, our content I'd like to say has been quite desirable to consumers. And so it has been our plan and activity to make it available in environments outside of the conventional pay-TV universes in the U.S. and outside of the country that take a couple of different forms and flavors. And it includes the sale of content which we continue to do to third-parties where there's a good deal. And as Ed pointed out in what is a somewhat nuanced answer to the earlier question we utilized some of the shows on linear and we utilize it on these targeted SVOD services.

Those have grown as we mentioned above our expectations and that is a way to reach consumers and to realize additional revenues which we've now had in place for several years. And they've grown as I mentioned above our expectations. And we're reaching consumers directly and we're reaching consumers through retailers some of whom are our conventional MVPD partners who are moving into the business of selling their high-speed data customers packages of these commercial-free channels that bear our names and bear new names Shudder Sundrance Now Acorn. So that is a -- for us an excellent trend. In multiple ways, it makes our content receive yet another route of monetization that's in harmony with the relationship and not at friction with the distributors with whom we have long-standing relationships and frankly we're reliant on. So longer term, we intend to pursue exactly that, good content and multiple means of monetization. I will add that -- and Sean said in his prepared remarks that we are mindful of the reward from the existing pay-TV universe and we are going to be careful and surgical about our management of costs associated with that revenue opportunity because of its pressures.

And we have organized and reorganized the company now three times over the past several years and we'll continue to alter the manner in which we are organized so that we can optimize those new distribution opportunities and optimize and be highly efficient in our advertising opportunities increasingly using data to guide us. So we're ever more specific and delivering more valuable to advertisers. And that material -- that data is now available and will manage costs with excruciating care so that they are in line with the rewards that are available and never ahead of it. I think you asked a question about online sales port. If you don't mind we have an online sales port where we think it's actually quite progressive. I'm going to ask Ed to comment on the specifics of it because it does represent a new way of doing business. It's rather encouraging for us.

Ed Carroll -- Chief Operating Officer

Right. I would say generally John, we go into this upfront. And as I've mentioned those conversations are happening. The factors that are very much in discussion, we have an ad tech technology that allows for unique targeting of the market segment for advertisers that continues to be something that's of high interest. We have increasing digital impressions and you may have noticed the launch of some of our content on Pluto the announcement against that this week. So we'll be selling impressions now not only on PVE and on VOD, but it will be part of our overall digital approach to the marketplace. And then we have the high-quality scripted series on basic cable which is the audience profile and the level of engagement is unique to basic cable. And so, all those things are factors as we enter these conversations.

John Janedis -- Analyst

Yes. Thanks a lot guys.

Operator

Your next question is from the line of Steven Cahall with Wells Fargo.

Steven Cahall -- Analyst

Thanks. Maybe just a follow up first on the upfront question. Is it your expectation that you'll have less inventory committed this year and that a lot of your peers were as well, just as marketers sort of sit out and see what the fall looks like? And do you think that starts to transition the industry into something more like a calendar upfront, or just more of reliance on scatter going forward? Does it kind of change the industry because of COVID-19? And then, I've got a big picture follow-up.

Ed Carroll -- Chief Operating Officer

Hey, Steven, it's Ed. You know what, I think it's too early on the question. It's a thoughtful question. I think we have to look at what the third quarter looks like. We have to look at how the different categories of advertisers. How their appetite resumes in terms of their spending. And we have to get further into the conversations that we're now having on a sort of a marketer by marketer basis before, I think, we'd be comfortable commenting on if we think there'll be any lasting or global shifts.

Steven Cahall -- Analyst

Okay. And then, just a big picture one for Josh and Sean. You've got access to about as much liquidity as your market cap and you generate a lot of free cash flow. And the shares are at an all-time low and while that might not be deserved, the Board has to be thinking about whether or not you're going to get fair market value in the public market. So, how do you just think about the opportunity of the company being private, especially, as you're making this big direct-to-consumer transition and just those different private versus public market valuations?

Sean Sullivan -- Executive Vice President and Chief Financial Officer

Yes, Steve, this is Sean. Again, it's a great question. We have obviously a lot of confidence in the balance sheet, a lot of confidence in the strategic plan and the free cash flow nature of the business. We're, obviously, a controlled company by the Dolan family. And obviously, Josh and I don't speak for them. So I think that that's a question that, obviously, we think there's a dislocation in terms of what we believe the enterprise value to be, versus what the market is valuing, given the nature of our content and given the five channels and some of the targeted SVODs and the real growth in the SVOD and the number of subscribers we have. So, as you saw at the beginning of the quarter, we bought $100 million of shares back as part of our capital allocation policy. That obviously shows confidence, not only in the management and in the controlling shareholder in the plan that we have and where we're going. So we expect, overtime, we'll be recognized and the value will be recognized for the investments we're making in the monetization and the key attributes of the business. But beyond that, obviously, really can't comment on the capital structure, public versus private, etc.

Steven Cahall -- Analyst

Thank you.

Seth Zaslow -- Senior Vice President of Investor Relations

Operator, why don't we take one question, please.

Operator

Okay. Your last question is from the line of Michael Morris with Guggenheim.

Michael Morris -- Analyst

Thank you. Good morning. I have a couple of digital-related questions, if I could. The first one has to do really with thinking about a DTC product for your core networks. And I know that you just addressed this in John's question a bit. But at this point, it seems like your distribution partners are raising their price to consumers at a faster rate, than they're raising their payments to you on a per subscriber basis. So I understand your interest in sort of protecting the ecosystem overall. But, given that dynamic, does that change your thought process going forward about making your highly demanded content available a la carte directly to consumers. So what do you think on that? And then my second question is around your advertising video-on-demand. When you make that content available like The Walking Dead on Pluto, how do you make sure that that doesn't dilute the value to your subscription distribution partners? And is that a revenue license fee? Or is it an ad share relationship? How does that work for you guys? Thanks.

Josh Sapan -- President and Chief Executive Officer

Sure, Mike, this is Josh. On the first question, we're very pleased with the harmony that we have with our distributors. We're pleased with the growth trajectory of our targeted SVOD services. We're pleased with the degree of content sharing. I think a few examples were identified by Ed that are really illustrative of how we've been able to be efficient and economical and potent by acquiring and/or producing material that finds its way on two multiple platforms. So, we think that the approach that we're taking now and the evidence of the growth in D2C subs, I won't mention as a trend because it's probably COVID-related, but we've seen an uptick in ratings during the last period of time. And a great regard for our channels by our MVPD partners in the United States. So we think that our general plan is sensible and balanced and careful and appropriate. And so, we are pursuing it for this period of time. And we like it. And we have renewed all of our MVPD agreements. And the terms we think have been reasonably good for them and for us, so we like our approach. I'm going to turn the AVOD question which is a good and interesting one over to Ed, who can share with you perhaps some detail on it. I certainly understand exactly why you asked it.

Ed Carroll -- Chief Operating Officer

Hi, Michael. So, the answer to your question really has to do with windowing and windowing specifically of our library content. So for example, you mentioned the Walking Dead. So the Walking Dead will be early seasons only. So, on the linear network on AMC we now would utilize early seasons of the Walking Dead only for stunting such as a weekend marathon. So arguably that content is underutilized. We also provided the Spanish language series of the Walking Dead for Pluto again not something that we're going to air on AMC linear. So that's one specific, but significant example. And then full series that have run their course on the network. So for example you'll see Into the Badlands. That series will be available on AVOD or you might see a classic unscripted series such as Bridezillas from WeTv that would be available on AVOD. So, that's really our approach. What we're doing is, we are working with the platforms to create another window, an additional window to bring in incremental revenue off of our library content.

Michael Morris -- Analyst

That's great. Is that a licensing relationship? Or is it an ad share relationship?

Ed Carroll -- Chief Operating Officer

It could be, but we probably won't go into the terms with any individual platform.

Michael Morris -- Analyst

Okay. And just one last one if I could before I let you go. Can you share how many subscribers you had across your four targeted OTT services either currently or at the end of the quarter? Any updated number there?

Ed Carroll -- Chief Operating Officer

So, you're talking about our SVOD services? I think, as we've said, we believe we will end the year in the range of 3.5 million to four million, but we're not in the practice of giving quarterly updates. But we're comfortable with that projection and it represents a significant increase in projections that we've shared in the past.

Michael Morris -- Analyst

Okay. Thank you, very much.

Seth Zaslow -- Senior Vice President of Investor Relations

Okay. Well, at this point, I'd like to thank everyone for joining us on today's call and for your interest in AMC Networks. We hope you all stay safe and healthy and we look forward to speaking with you again next quarter. Operator, you can now conclude the call.